What was your next step?
I went back to HUD. I was intrigued by what was happening with the new Clinton administration and Secretary Henry Cisneros and Assistant Secretary Nic Retsinas and Deputy Secretary Helen Dunlap. I was there from ’93 to ’96 as a simultaneous special assistant to the assistant secretary for housing, FHA commissioner, and deputy assistant secretary for multifamily.
That was a wonderful time at HUD, a lot of vigor, and a lot of leadership, which is not always exhibited as strongly as it could or should be. Leadership was very prevalent during that administration.
You’ve worked with five administrations. What are some the big changes you’ve seen, and the policies — good and bad — that have endured?
I have an unfortunate tendency to come up with these bad metaphors, but back before Louie Sullivan invented steel high-rise concepts, buildings were built out of stone, and you had to have a very strong, big, very heavy foundation in order to support the superstructure. Think of the Monadnock Building in Chicago, which is usually cited as one of the principal examples of that. That said, I think, fundamentally, the programs that have been established and have grown over time, like 221(d)(3) BMIR [insured and subsidized mortgage loans], 236 [rental assistance], 515 [rural rental housing], 202 [senior housing], [and] the project-based Section 8 programs in conjunction with the 221(d)(4) FHA insurance program have established a strong, very solid set of principles and commitment to affordable housing that melds FHA and other forms of mortgage lending with tenant subsidy programs with equity that comes through a variety of resources. We now, of course, get that principally from the low-income housing tax credit program.
The other fundamental event was what I would call a devolution. When CDBG came along it established a very new model: “Let’s let the state and local officials make the basic decisions. We’ll provide the resources.”
On the big picture, we need to reach out beyond the boundaries of just housing programs and think about how they fit into community development, how they fit into transportation systems, how they fit into the way neighborhoods grow. I think that there’s much more of a sense that for affordable housing to be successful it has to be linked in to other aspects of community development.
Then there is the advent and the burgeoning strength of the nonprofit housing development corporations that are aided and abetted by wonderful organizations: by LISC, Enterprise, NeighborWorks America, Housing Partnership Network, Stewards of Affordable Housing for the Future, and of course, our friends at the MacArthur Foundation.
The CDCs and nonprofit housing development corporations are mission-directed organizations that are committed to not throwing profits off to their investors but to putting those profits back into the community.
For much of the time that you’re talking about, there were no CDCs, and so development was either government or for-profit.
You’re right. It was the private for-profit developers who, frankly, were doing very, very well because of the way the programs were set up and then there were the public housing authorities, and that was pretty much it. I don’t want to either over-emphasize or under-emphasize the importance of the CDCs and the nonprofit housing development corporations, but I think they’ve added a whole new dimension. That said, many of those organizations are now at the point where they’re assessing and re-assessing their balance sheets, if I can put it that bluntly. They’re looking at their viability and are considering how they want to deal with the future.
And so, personally, I think that we’re going to see more partnerships, more various holding company merger kind of relationships amongst those organizations who, frankly, are now at the point where they need to decide what they’re going to do now that they’re into their adulthood.
Their balance sheet is only part of the equation. What about their role in the community and their mission?
That’s a very interesting point. I’m involved with various nonprofit organizations, and what we’re struggling with, Harold, is how smaller organizations can preserve their core mission while at the same time becoming more efficient, effective, and strong from a financial standpoint? Do they all need to have their own separate development, asset management, sometimes property management operations, or is there a way of thinking about consolidation of some of those functions while enabling the organizations, in a way, to go back to their roots?
Is it as housing development organizations, or is it as community change organizations? Are they there to build buildings or galvanize the electorate?
In order to, quote-unquote “build buildings,” you need a very strong, powerful development asset management acquisition, property management operation, and sometimes that, I think, will need to come from some kind of consolidated structuring, while at the same time emphasize the core mission of these organizations.
Randy Stoeker wrote a piece for us called Empowering Redevelopment: Toward a Different CDC (SF May/June 1996), in which he basically said we don’t need a whole lot of little CDCs, but rather a few big, mission-driven nonprofits that have really good capacity, really good skills, and are willing to work with other neighborhood organizations who tell them what they need because they’re the voice of the community.
Yes. Well, and I think the same challenge and opportunity applies to CDFIs. I think many of the CDFIs are realizing, similar to the CDCs and the nonprofit housing development corporations, that they need to consolidate and to become more effective by merging and partnering with other CDFIs in whatever manner is most appropriate. David Smith (see essay in this issue), operating through the Affordable Housing Institute, did a publication called Mission Entrepreneurial Entities: Essential Actors in Affordable Housing Delivery. He got funding from the Bill and Melinda Gates Foundation, and he did, frankly, a very, very nice report that Ray Christman wrote the U.S. part of and Gaynor Asquith wrote the U.K. part of, comparing and contrasting experiences with, and drawing lessons from exactly the organizations we’re talking about.